Coaching Your Self-Employed Clients on Taxes

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The self-employed workforce, which today accounts for 55 million Americans, or roughly 36 percent of the American workforce, is rapidly growing. This is a great time of the year to connect with your self-employed clients and coach them with small business-related tax tips. While they may always be heads down with their business operations, it’s a good practice to take advantage of any opportunity you can to educate them on some easy-to-digest tax topics. As their trusted advisor, you can help them save vital tax dollars and improve their cash flow and bottom line.

Here are several tax concepts that you can cut and paste to share with your self-employed clients:

Work Expenses and Related Fees. It’s time to think inside, outside and around every corner of the box for this one. What does it cost to run your business? You can deduct office equipment, such as printers and computers, and even replacement ink and toner. The paper you’re printing on? Your company letterhead and business cards? Yes, all of those relatively small, and possibly overlooked, costs can be deducted from your taxable income. Just make sure they are costs dedicated to your business.

In the age of online media, costs and fees are looking different every year. Do you pay for your website hosting and domain name? Do you pay online banking fees, or online payroll software costs? Make sure you don’t skip those expenses when you file your taxes.  

Office at Home. Not only are you able to write off your equipment expenses, but you’re also actually able to take the space you use in your house as a home office tax deduction, as long as it is dedicated work space for your job at home. The IRS allows you to deduct part of your home payment (either rent or mortgage), as it relates to the amount of space you use in your home for your office.

Because your office is within the walls of your home, you are also able to write off part of your home insurance and utility bills. The amount, again, depends on the size of your office, and even if you choose not to take the home office deduction, you can still deduct your office supplies. You also may be able to deduct your home office, using the simplified home office deduction, a flat $1,500 based on up to 300 square feet of office space, used at $5 per square foot.  

Travel and Education. Doctors have journals, and teachers have in-service training, to help keep them educated and up to date about current strategies and the best new ideas. For the self-employed, keeping up to date with the latest and greatest trends isn’t always so easy. For most of us, training and education comes at a price. We have to pay for the conference or the class, travel to get there, and even a hotel room, depending on the length of the conference.

Luckily, business travel, education and training expenses may all be tax deductible. Even taxis, ride-share services such as Uber, shuttles and parking costs are tax deductible. If you rent a car when you arrive at your destination, the expense is deductible, as long as the car is used exclusively for business. 

Hardware and Software. Did you buy a desktop computer, laptop, a new monitor, tablet or any other piece of technology to help grow your business? It all may be deductible. Just be sure your tablet is strictly for business purposes and not your child’s favorite toy!

What about computer software? If you didn’t buy a new computer this past year, but you had to update your current software or purchase new software to get the job done, you can write that spending off. This is an especially important deduction to remember because, as we all know, software gets expensive … quickly.  

Everyday Supplies and Office Furniture. Remember back in the day when you worked in a cubicle at some big office? Remember how many pens you lost and how many Post-It pads, highlighters, paperclips and staples you used? You don’t think about the costs of such items when you’re an employee, but when you’re self-employed, you realize how quickly those everyday items add up. And, don’t forget your home office furniture. Your desk, chair, printer stand and even your trashcan can all be deducted on your tax return. Just remember to keep your receipts.

Final Thoughts for the Tax Professional

There are so many tax deductions related to being self-employed. You can encourage your self-employed and even small business owners to use QuickBooks® Self-Employed year-round to track income and expenses, estimate taxes, and get ready for tax time.

With a changing economy, there are many self-employed people entering the business world every day, and this creates new opportunities for you to grow your practice by providing vital tax and business advice, as well as tax and accounting compliance services.